Tenants of NYC's Stuyvesant Town bid for ownership

Updated Nov. 30, 2011 7:41 p.m. ET

Associated Press

NEW YORK — The 110-building Manhattan complex that has long been an American icon of affordable middle-class housing faces a new era: Tenants of Stuyvesant Town-Peter Cooper Village are aiming to buy their apartments.

At a news conference Wednesday, officials representing 25,000 residents announced they will partner with Brookfield Asset Management Inc. to bid for the private community on Manhattan's East Side first built for World War II veterans.

Manhattan Borough President Scott Stringer said the deal represents the survival of affordability that would keep his New York borough from becoming a community "for the very, very rich, and an enclave for the poor — with nothing in-between."

As real estate prices skyrocketed in recent years, tenants of Manhattan's biggest apartment complex battled powerful developers — and a mercurial market — to try to claim ownership of the bustling urban oasis that was once home to notable New Yorkers from David Axelrod, advisor to President Barack Obama, to the late Pulitzer Prize-winning author Frank McCourt.

If successful, the condominium conversion plan would allow tenants to purchase their apartments "at a reasonable price," Alvin Doyle, president of the Stuyvesant Town-Peter Cooper Village Tenants Association, said in a letter posted on the group's website.

Rent-stabilized residents who wished to keep renting could do so, under no pressure to move.

Constructed after World War II for returning veterans and championed by the then powerful Parks Commissioner Robert Moses, the red-brick complex is a paean to urbanism: 11,000 apartments on 80 acres that cover 10 Manhattan city blocks.

The gated community stretches from 14th to 23rd streets between First Avenue and Avenue C, sprinkled with parkland, landscaped walkways and water fountains. Its residents represent a varied demographic spectrum including longtime older residents and others moving in now.

Dubbed Stuy Town, it was named after Peter Stuyvesant, the last director-general of the Dutch colony of New Amsterdam, whose 17th century farm occupied the site. Peter Cooper Village is named after the 19th century industrialist, inventor and philanthropist Peter Cooper.

A condo conversion would come after years of financial wrangling that included near-bankruptcy.

The 80-acre property has been controlled by CWCapital Asset Management LLC since last year. The company represents bondholders on a $3 billion mortgage after Tishman Speyer Properties LP and BlackRock Inc. defaulted on the loan as the property's value sank and a plan to raise rents fell through.

Tishman Speyer and BlackRock paid a hefty $5.4 billion for the development in 2006, before the mortgage crash, with plans to convert rent-regulated units to market rates.

Investors who lost money include the Church of England and the California Public Employees' Retirement System.

The tenants association said Wednesday that at the time, the complex faced "aggressive and often frivolous litigation aimed at evicting long-time rent-stabilized tenants" — a failed campaign the association said would not be repeated under the proposed deal.

"With Brookfield on our team, CWCapital, the entity representing the senior bondholders of the property, will find it extremely difficult to ignore us," said Doyle, president of the tenants association.

Brookfiled Asset is the parent company of Brookfield Office Properties, best known recently as owner of Manhattan's Zuccotti Park — home of the Occupy Wall Street movement until the police crackdown in mid-November.

The deal is far from complete, and could be a lengthy process.

For starters, the bid size will depend on how many tenants want to buy their apartments and how much they're willing to pay. In January 2010, Standard & Poor estimated the value of the complex at $1.8 billion.

In addition, lawyers are trying to determine how much money some renters are owed as a result of a 2009 State Court of Appeals ruling that property owners had violated the law by deregulating units while receiving tax breaks. However, due to vacancy and high-income decontrol, thousands of units are now legitimately renting at market rate.

Stringer said there would be about 100 public hearings on the proposed bid to CWCapital that will also determine future rents.

Also joining Wednesday's news conference were New York City Council Speaker Christine Quinn, state Sen. Tom Duane and New York City Councilman Dan Garodnick, a resident of Peter Cooper Village who has been instrumental in the proposed deal.

Quinn said the city is likely to contribute to a capital fund to help create some permanently affordable rental units.

"Stuy Town and Peter Cooper are among the last bastions of middle class affordability in our city, and tenant ownership will make sure they stay that say," she said.

Not present but lending their support were both U.S. senators from New York — Charles Schumer and Kirsten Gillibrand, as well as U.S. Rep. Carolyn Maloney.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.